Net interest income rises 27% to ₹242.3 crore, while pre-provision operating profit increases 58% year-on-year to ₹109.2 crore
MUMBAI, (Economy India): IndoStar Capital Finance Limited reported a 51% year-on-year increase in disbursements to ₹1,399 crore during the second quarter of FY27, reflecting higher lending activity across its key retail finance segments.
The company’s assets under management (AUM) stood at ₹8,459 crore as of September 30, 2026, registering 12% growth compared with the corresponding period last year.
The retail-focused, middle-layer non-banking financial company (NBFC), registered with the Reserve Bank of India, announced its financial results for the quarter and half year ended September 30, 2026.
IndoStar focuses on secured lending through Used Vehicle Finance and Micro Loans Against Property (Micro LAP). Its lending strategy targets the credit requirements of underbanked and underserved income-generating customers, particularly in Tier 3, Tier 4 and Tier 5 markets.
Net Interest Income Rises 27% to ₹242.3 Crore
IndoStar’s standalone net interest income (NII) increased 27% year-on-year to ₹242.3 crore in Q2 FY27, compared with ₹190.1 crore in the year-ago quarter. On a sequential basis, NII grew 10% from ₹219.5 crore in Q1 FY27.
Pre-provision operating profit (PPOP) rose 58% year-on-year to ₹109.2 crore, against ₹69.1 crore in Q2 FY26. It was up 18% from ₹92.9 crore in the preceding quarter.
The company reported standalone profit after tax of ₹13.1 crore for Q2 FY27, compared with ₹10.5 crore in the corresponding quarter last year and ₹11.4 crore in Q1 FY27.
Operating expenses stood at ₹133.2 crore, up 10% from ₹121 crore in Q2 FY26.
Funding Cost Declines to 9.7%
IndoStar continued to strengthen its funding profile during the quarter. Its weighted average cost of funds declined to 9.7% in Q2 FY27 from 10.4% in Q2 FY26, representing an improvement of 70 basis points.
The incremental cost of funds during the quarter stood at 9.1%.
The decline in funding costs forms part of the company’s efforts to improve its funding profile while expanding its secured retail lending portfolio.
Micro LAP Portfolio Expands 29% Sequentially
The company reported growth across its two principal lending segments. Its Vehicle Finance portfolio expanded 3% quarter-on-quarter, while the Micro LAP portfolio grew 29% during the same period.
IndoStar said it continued to follow a disciplined credit-risk approach, focusing on comprehensive borrower assessments, selective customer onboarding and early identification of potential stress indicators.
The company also maintained limited exposure to new-to-credit customers as part of its portfolio strategy.
Branch Network Reaches 475 Locations
IndoStar expanded its distribution network to 475 locations across 24 states and union territories during Q2 FY27, adding seven branches in the quarter.
The company is also scaling its Micro LAP business through its existing Vehicle Finance network. The number of co-located Micro LAP branches increased from 125 to 154 during the quarter.
The expansion is intended to strengthen the company’s reach in underserved markets and support growth in its secured lending businesses.
Asset Quality and Capital Position
As of September 30, 2026, IndoStar reported Gross Stage 3 assets of 4.5% and Net Stage 3 assets of 2.4%.
Its standalone capital adequacy ratio (CAR) stood at 36% at the end of Q2 FY27, compared with 34.8% in Q1 FY27. The debt-to-equity ratio was 1.6 times, against 1.5 times in the preceding quarter.
IndoStar Capital Finance: Key Q2 FY27 Numbers
| Particulars | Q2 FY27 | Year-on-year change |
|---|---|---|
| Disbursements | ₹1,399 crore | +51% |
| Assets under management | ₹8,459 crore | +12% |
| Net interest income | ₹242.3 crore | +27% |
| Pre-provision operating profit | ₹109.2 crore | +58% |
| Profit after tax | ₹13.1 crore | — |
| Operating expenses | ₹133.2 crore | +10% |
| Gross Stage 3 assets | 4.5% | — |
| Net Stage 3 assets | 2.4% | — |
| Weighted average cost of funds | 9.7% | Down 70 bps |
Note: Financial performance figures are standalone. AUM and asset-quality figures are as of September 30, 2026.
Focus on Secured Retail Lending
IndoStar’s Q2 FY27 performance reflects an expansion in disbursements and AUM, supported by growth in its Vehicle Finance and Micro LAP businesses. The increase in net interest income and pre-provision operating profit, alongside a lower weighted average cost of funds, highlights the key operating trends reported by the company during the quarter.
Its strategy remains centred on secured, high-yielding lending to customers in smaller towns and underserved markets, supported by branch expansion and a focus on credit-risk assessment.
(Economy India)
